An International Monetary Fund (IMF) team led by Mr. Eric Mottu, visited
Nouakchott from February 28 to March 13, 2017 to hold discussions on the
2017 Article IV consultations with the Mauritanian authorities and to
discuss an economic program that could be supported by an arrangement under
the Fund’s Extended Credit Facility (ECF). At the conclusion of the
mission, Mr. Mottu made the following statement:
“The mission and the Mauritanian authorities held constructive discussions
on a Mauritanian economic and financial program for the period 2017-20 that
could be supported by an arrangement under the IMF’s Extended Credit
Facility (ECF). Discussions will continue in the weeks ahead and the
parties agreed on the importance of moving forward quickly.
“The Mauritanian authorities have taken determined steps to adapt their
economic policies to take account of the difficult conditions of the past
two years following the fall in metal prices. They significantly reduced
the fiscal deficit by more than three percent of GDP in 2016, drew on
external loans and grants, and used the exchange rate to regain
competitiveness. They also undertook a significant series of economic
reforms and public investments, particularly in infrastructure. these
actions helped reduce macroeconomic imbalances: inflation remained low at
1.5 percent on average, the external current account deficit fell to 16
percent of GDP (12 percent excluding extractive sector imports financed by
foreign investments) and foreign exchange reserves remained at five and a
half months of non-extractive sector imports. However, as in the case of
other commodity exporters, growth remained weak at a provisionally
estimated rate between 1.5 and 2.1 percent and external debt increased,
albeit at a slower pace, to 72 percent of GDP (excluding passive debt owed
to Kuwait).
“Prospects for recovery in the short term are good, buoyed by higher metal
prices— although the uptick may prove to be only temporary—and by strong
public investment. Development of the gas sector in the coming years could
also boost future growth.
“The country faces numerous challenges, in particular as regards supporting
inclusive economic growth and diversification; creating jobs; reducing
poverty, which is an ongoing challenge despite the progress made; and
safeguarding macroeconomic stability while seeking to keep external debt
levels within sustainable limits over the medium term.
“The authorities are preparing an economic and financial program to achieve
these goals, which should rest on several pillars:
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Consolidate the fiscal efforts achieved by modernizing fiscal
policy and enhancing the efficiency of the tax and customs
administrations, prioritizing public expenditure and investment,
and controlling government debt.
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Increase social spending, particularly on education and healthcare,
and strengthen poverty reduction measures.
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Adopt more proactive monetary and liquidity management policies,
and improve the functioning of the foreign exchange market to offer
greater flexibility.
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Continue to strengthen banking supervision and adapt the regulatory
framework to protect the stability of the financial system, and
increase private sector credit.
-
Continue with structural reforms to improve the business climate
and economic governance in order to enhance competitiveness and
promote diversification.
“While implementing this economic program, new non-concessional borrowing
should be kept to a minimum to avoid a debt overhang that would jeopardize
the sustainability of external debt and public finances. In addition,
support from development partners should be sought in the form of grants
and concessional loans that can be used to finance the much-needed
investments and foster inclusive growth while maintaining debt
sustainability.
“The mission met with the Prime Minister, Mr. Yahya Ould Hademine; the
Central Bank Governor, Mr. Abdel Aziz Ould Dahi; the Minister of Economy
and Finance, Mr. El Moctar Ould Djay; the Minister of Petroleum, Energy and
Mining, Mr. Mohamed Abdel Vettah; the Minister for Fisheries and Marine
Resources, Mr. Nani Ould Chrougha; the Deputy Budget Minister, Mr. Mohamed
Ould Kembou; and other senior officials. The team also held discussions
with representatives of civil society, the private sector, and development
partners. The team would like to thank the authorities for their warm
welcome and excellent cooperation.”
